Bank of England gives hawkish warning as it cuts rates to 4.5%

By Jerry  Published On February 6, 2025

The Bank of England’s Monetary Policy Committee voted to cut interest rates to a 19-month low but struck a hawkish tone by signaling that only two more reductions are needed to bring inflation back to the 2% target.

In a blow to Chancellor of the Exchequer Rachel Reeves, the BOE warned that inflation will rise “quite sharply” to peak at 3.7% later this year, up from 2.8% in the last forecast, as it downgraded growth and its estimate of the economy’s growth capacity, or speed limit, in the short term.

The MPC lowered its benchmark rate by a quarter point to 4.5%, the lowest level since June 2023, in a reprieve for the more-than-half-a-million homeowners coming off five-year fixed mortgage deals in 2025. Seven of the nine members voted for a quarter-point cut but two, the external policymakers Swati Dhingra and Catherine Mann, wanted a half point reduction. It was the first vote for a cut by Mann, who has taken an ‘’activist” approach.

Source: FORTUNE


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